Glass Lewis Publishes 2025 Canadian Policy Updates
By Shirley Westcott
Proxy advisor Glass Lewis has issued 2025 updates to its Canadian benchmark policy¹ and its benchmark policies on shareholder proposals and environmental, social and governance (ESG) issues. The revised guidelines are effective for annual meetings on or after Jan. 1, 2025.
The changes, which are summarized below, primarily address artificial intelligence (AI)–specifically board oversight and shareholder proposals—as well as the format of shareholder meetings and the disclosure of directors’ skills and experience. Glass Lewis also clarified its approach to problematic executive pay factors and the number of meetings held by governance committees.
Board Oversight of AI
In view of the rapid development and adoption of AI technologies, Glass Lewis has added a new section to its guidelines on its approach to AI-related risk oversight.
Glass Lewis believes that all companies that develop or employ the use of AI in their operations should provide clear disclosure on how the board is overseeing AI and expanding directors’ collective expertise and understanding in this area. Where there is evidence that inadequate management of AI technologies has resulted in material harm to shareholders, Glass Lewis may recommend against the responsible directors or other matters up for a shareholder vote.
Shareholder Proposals on AI
Glass Lewis has added a section to its global benchmark policies on its approach to shareholder proposals dealing with companies’ use of AI in their operations and any ethical considerations. It evaluates such proposals on a case-by-case basis, taking into account the following:
- The proposal’s request,
- Disclosures provided by the company and its peers concerning their use of AI and the oversight afforded to AI-related issues, and
- Any lawsuits, fines or high-profile controversies concerning the company’s use of AI and whether the company’s management of this issue presents a clear risk to shareholder value.
Shareholder Meeting Format
Currently, Glass Lewis does not have an explicit policy regarding the format of shareholder meetings, which may be in-person, virtual-only, hybrid (where shareholders may participate online and in-person), and in-person meetings with a virtual element (where online attendees do not have the same capacity to participate as in-person attendees).
A number of investors have raised concerns that virtual-only meetings may curb their ability to communicate with the company’s management. In view of this, Glass Lewis is stipulating that companies should disclose their reason for choosing a virtual-only meeting format. In egregious cases where a board has failed to address legitimate, publicly expressed shareholder concerns regarding the meeting format, Glass Lewis may recommend against the chair of the governance committee or other accountable directors.
As in past years, Glass Lewis will generally recommend against the chair of the governance committee if the company plans to hold a virtual-only meeting and shareholders attending online are not afforded the same rights and opportunities to participate as they would in person.
Disclosure of Professional Skills and Experience
Glass Lewis believes companies should disclose sufficient information to allow a meaningful assessment of a board’s skills and competencies. At large-cap TSX index companies, Glass Lewis reviews board skills matrices².
Glass Lewis has added language to its guidelines that it may recommend against the chair of the nominating committee (or equivalent) at S&P/TSX 60 companies if their disclosures do not permit a meaningful evaluation of the key skills and experience of director nominees.
Clarifying Amendments
Governance Committee Meetings
Glass Lewis has clarified that it expects the governance committee of all TSX boards to meet at least once a year. If the committee fails to hold at least one meeting, Glass Lewis may recommend against the chair of the committee or, in the absence of a chair, the senior member of the committee.
Approach to Executive Pay Program
Glass Lewis has clarified its discussion of say-on-pay (SOP) recommendations to emphasize its holistic approach to analyzing executive compensation programs. Few program features, on their own, would lead to an unfavorable recommendation. Glass Lewis does not utilize a pre-determined scorecard approach when considering individual features, such as the allocation of long-term incentives between performance- based and time-based awards. Unfavorable factors in a pay program are reviewed in the context of rationale, overall structure, disclosure quality, the program’s ability to align executive pay with performance and the shareholder experience, and the trajectory of the pay program resulting from changes made by the compensation committee.
Glass Lewis has delineated two additional program features that it views negatively in its review of SOP:
- Egregious or excessive perquisites.
- Adjustments to performance results that lead to problematic pay outcomes.
This update essentially mirrors Glass Lewis’s U.S. benchmark policy update for 2025 regarding its approach to executive compensation.
¹ See Glass Lewis’s 2025 Canadian benchmark policies at: https://resources.glasslewis.com/hubfs/2025%20Guidelines/2025%20 Canada%20Benchmark%20Policy%20Guidelines.pdf and its 2025 benchmark policies on shareholder proposals and ESG-related issues at: https://resources.glasslewis.com/hubfs/2025%20Guidelines/2025%20Shareholder%20Proposals%20&%20ESG%20Benchmark%20 Policy%20Guidelines.pdf.
² See the skill sets Glass Lewis considers in key sectors at: https://www.glasslewis.com/wp-content/uploads/2020/01/Board-Skills-Appendix-Canada.pdf.
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